World Bank sanctions $1.5 billion loan to support India's low carbon energy projects
- In Reports
- 03:25 PM, Jun 29, 2024
- Myind Staff
The World Bank has given the green light to provide $1.5 billion in financing aimed at accelerating India's progress in low-carbon energy development. This financing marks the second phase of support, designed to foster a robust market for green hydrogen, expand renewable energy capacity, and catalyse investments in low-carbon energy initiatives, according to a statement by the World Bank.
"It was stated that India, the fastest-growing large economy globally, is anticipated to sustain its rapid expansion. Achieving a separation between economic growth and emissions growth will necessitate the scaling up of renewable energy, particularly in challenging industrial sectors," the statement highlighted.
The World Bank approved a $1.5 billion financing to help India accelerate low-carbon energy development. This includes expanding green hydrogen production, advancing climate finance, and supporting reforms for critical technologies like electrolysers.
This operation follows a similar-sized initiative in June 2023, which facilitated waivers for renewable energy transmission charges and set frameworks for large-scale renewable energy tenders and a national carbon credit market.
The operation also includes reforms to increase the penetration of renewable energy. This involves incentivising battery energy storage solutions and amending the Indian Electricity Grid Code to enhance the integration of renewable energy into the grid, the World Bank stated.
World Bank Country Director for India, Auguste Tano Kouame expressed satisfaction in continuing to support India's low-carbon development strategy. He highlighted that this strategy aims to help India achieve its net-zero emissions target while fostering job creation in clean energy within the private sector. According to Kouame, both the first and second operations emphasise enhancing private investment in green hydrogen and renewable energy.
The reforms facilitated by the operation are projected to lead to the annual production of at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolysers starting from fiscal year 2025-26.
Additionally, these initiatives are expected to significantly bolster renewable energy capacity and contribute to a reduction in emissions by 50 million tons per year, as per the statement. The operation will also support the advancement of a national carbon credit market.
Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal, Team Leaders for the operation, highlighted India's strides in developing a domestic market for green hydrogen alongside expanding renewable energy capacity. They noted strong private sector interest in the first tenders under the National Green Hydrogen Mission’s incentive scheme. The operation aims to scale up investments in green hydrogen and renewable energy infrastructure, supporting India's efforts to meet its Nationally Determined Contributions targets.
The operation aligns with India’s energy security objectives and the World Bank’s Hydrogen for Development (H4D) Partnership. Funding for the operation comprises a £1.46 billion loan from the International Bank for Reconstruction and Development (IBRD) and a £31.5 million credit from the International Development Association (IDA).
Image source: Business Standard
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